Fitch is out with something of an ominous warning on the US credit rating.

Fitch Ratings affirmed that the United States’ ‘AAA’ credit rating will remain on a Rating Watch Negative despite the resolution of the debt limit impasse. It was placed on ratings watch on May 24 in a move that prompted some US lawmakers to grow more flexible.

Fitch says it will consider the implications of the recent political brinkmanship and assesses the country’s medium-term fiscal and debt trajectories with a decision coming in Q3.

President Biden is expected to sign a bill to suspend the U.S. debt limit until January 2025 today. The agreement, which matches Fitch's expectations, features austerity measures, including caps on non-military discretionary spending, that will save an estimated $1.5 trillion over the next decade, according to the Congressional Budget Office.

Despite the positive development, Fitch expressed concern about ongoing political standoffs around the debt limit, which lower confidence in US governance on fiscal and debt matters. On the positive side, they note that the U.S. rating is supported by factors such as the size of the economy, high GDP per capita, and the US dollar 's status as the world's dominant reserve currency. They say factors such as the credibility of policymaking and projected medium-term fiscal and debt trajectories will play a significant role in their decision.

I don't believe they will downgrade the US after S&P was sued into oblivion when they did it (in a case of banana republic-style retaliation) but you certainly can't rule it out.

US credit ratings

Chart via @priapusIQ